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Building the new value proposition

Paul Morford, Founder, Executive Chair 

As the financial services industry continues to evolve, the single greatest challenge for independent dealers and advisors who serve mass affluent clients is maintaining their relevance in the client relationship. The current practice of shipping mass market and mass affluent accumulators off to corporate call centers or internal robo’s is not the value proposition or the solution clients expect. How does this develop trust? This question of the value proposition and its relevance to the investor must lead to a profound shift in thinking.

We are seeing a shift from the traditional fund distribution model to personalized wealth management. Think about that: a target market of one. Every client gets individual attention and customized solutions. While that is hard enough to deliver at the High-Net-Worth level, is it even possible at a mass affluent level? It is. We will evolve from a model where clients were matched to a product, to products matched to each client and on to a platform where product is customized for each client.

Product evolution

The US RIA market has attempted to address this over the past decade by shifting to TAMPS (Turnkey Asset Management Platforms) to develop models for clients. It has been very successful and has allowed advisors to deliver quality investment solutions while focusing on differentiating their practice – adding value by spending time with clients providing holistic advice rather than a narrow sleeve of product options. The recent TAMP trends have centered on open and closed product shelf providers pitching technology to scale business with support.

The TAMP market in the US has matured bringing with it the need to personalize model portfolios as a way for advisors to differentiate from competitors. TAMPS allow advisors to scale their business and retain mass affluent clients. But that success is now leading to the need to evolve further – to personalized models. Mass customization if you will. I expect the same to occur here in Canada – and on a compressed timeline. Models, or TAMPS are making their debut and should gain traction as a superior alternative to advisors hunting and selecting funds on their own. But that will quickly shift to the need to further customize to demonstrate even greater value to clients.

Canada is still in the early stages of TAMP adoption. The economics of advisor and dealer business models will gain more attention in Canada as the need for profitably and scale become paramount in the fight against fee compression and competition. The evolution of turnkey asset management in the U.S. has been characterized by a shift towards comprehensive, technology-driven solutions delivered through unified platforms. This eliminates the need for multi-vendor management, simplifying the business and empowering financial advisors to deliver superior client experiences and navigate a rapidly changing financial landscape. There is no doubt this trend will hit Canada, and product will become entwined with delivery ecosystems.

What is emerging in importance is the need for product as part of the platform, combined with technology to drive efficiency, scalability and client satisfaction delivered through an advisor centric design.

Four key themes that need to be considered for investor product solutions:

Democratization – lower cost/broader access
Scalability – profitable, sustainable growth
Flexibility – multiple advisor options for product
Personalization – target market of one

Benefits of an integrated platform:

Find more time

Free up valuable front and back-office resources that can be applied to managing client relationships and increasing productivity.

Manage Growth

Access an efficient platform to 
complete investment
activities and increase AUM without adding additional staff.

Enhance client experience

Provide clients with an engaging digital experience to streamline onboarding, access reporting, and review overall performance.

Expand client base

Choose from a comprehensive array of investing options that work with a range of client types.

Streamline daily workflows

Enhance productivity through the combination of efficient technology and a service and support team.

Enhance profitability

Outsource costly activities related to research, portfolio construction, rebalancing, and more.
One of the biggest problems with technology is the integration of existing tools. The inability to move data across various software tools and multiple vendors lacks a unified platform from onboarding to trading thus hampering advisor effectiveness. This creates a demand for new solutions. This is why we see a growing demand for a fully integrated product and technology platform to optimize product solutions at a client level as the key to advisors scaling their business in the new era of client personalization.

Product can no longer be a silo but rather it needs to be matched to each client and integrated with a platform. This will provide a digital advantage to advisors: reducing errors, removing workflow complexities, creating insights from client data, and keeping them connected to the advisor. The U.S has been developing multiple options for advisors, allowing them to find what suits them best. The demand for outsourced wealth management solutions is only starting in Canada and like the US it will continue to grow. Innovation and platform integration are key. Managed Solutions product options, integrated into a unified trade execution and custody platform are the first step.

Informational purposes only
The information and ideas set out herein are only conceptual and describe views of a possible future. In particular, the whitepaper is being shared to outline some of the ideas of the writer and is provided solely for INFORMATIONAL PURPOSES and does not predict with any certainty as too how actual events will unfold. Please do not rely on this information in making business decisions because the development and functionality that becomes available remains subject to a host of factors not under the writer’s control. Further, the white paper may be amended or replaced from time to time. There are no obligations to update the Whitepaper or the Website, or to provide recipients with access to any information beyond what is provided herein.